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Republicans Seek to Derail Plan Restricting Drug Company Deals

Sept. 28 (Bloomberg) -- Republican senators are vowing to
block a measure that would put limits on patent agreements
between generic and brand-name drug companies, a practice that
critics call pay-for-delay deals.

“The bill would do serious violence” to the process for
bringing cheaper generic drugs to market, Republican Senators
Jeff Sessions of Alabama, Lindsey Graham of South Carolina, Tom
Coburn of Oklahoma and John Cornyn of Texas said in a Sept. 17
letter to two party leaders.

Their tactics could postpone consideration of the bill
until the next Congress is seated, when likely gains by
Republicans in the November midterm elections could mean defeat
for the measure.

Republicans could “delay it until after the election, and
then as a practical matter it’s dead,” Robert Lande, director
of the Washington-based American Antitrust Institute and a bill
supporter, said in an interview.

Senator Herb Kohl, a Wisconsin Democrat who is the
measure’s cosponsor, said he wants to try to pass it this year
by attaching it to a bill with broad bipartisan support.

“Every day we don’t pass this legislation is another day
that affordable generics are kept out of the hands of consumers,
and another day that taxpayers foot the bill for sky-high
prescription drug reimbursements,” Kohl said in a statement.

Licensing Rights

The U.S. Federal Trade Commission contends brand-name
companies often offer generic-drug manufacturers licensing
rights on a product or other compensation in exchange for an
agreement that delays the marketing of cheaper drugs.

The drug bill has some support among Republicans. In a
statement, Senator Charles Grassley, an Iowa Republican and a
co-sponsor, called the deals “anti-competitive, anti-consumer
pay-offs.”

Drug companies that oppose the legislation, including
Cephalon Inc. and Teva Pharmaceutical Industries Ltd., said the
arrangement can help consumers by bringing cheaper drugs to
market before a patent otherwise would have allowed.

The House on July 2 passed a version of the measure as part
of a war-funding bill.

Kohl said he is trying to incorporate his plan into a bill
that has programs that must be funded to take advantage of the
cost-saving features of restricting the drug deals. The
Congressional Budget Office estimated that his legislation would
save taxpayers $2.7 billion over 10 years.

Funding Measure

On July 29, the Senate Appropriations Committee attached
Kohl’s bill to legislation that funds the Federal Trade
Commission.

Republican opponents, in their Sept. 17 letter to Senate
Minority Leader Mitch McConnell of Kentucky and Senator Thad
Cochran of Mississippi, the ranking Republican on the
Appropriations Committee, said they would block Senate action on
the spending bill as long as the drug measure was part it.

Overcoming that tactic, or any similar move to prevent
consideration of the proposal, requires 60 votes in the 100-member Senate. Democrats control the Senate 59-41.

“We have serious concerns about attaching this
controversial legislation to any moving vehicle in the Senate,”
Stephen Boyd, a spokesman for Sessions, said in an e-mail.

The senators objections are the latest hurdle to imposing
limitations on the agreements. A U.S. appeals court on Sept. 7
refused to reconsider whether the settlement Bayer AG reached
over a challenge to its patent on the anthrax treatment Cipro
was appropriate.

Legal Setback

The decision was a setback for Federal Trade Commission
Chairman Jon Leibowitz, who has made banning the deals a
priority.

“We haven’t won a major court case since 2003,”
Leibowitz said in a speech to a Washington antitrust conference
on Sept. 21. “We haven’t passed any legislation yet.”

In an interview after his speech, Leibowitz said he has
“great confidence” that Kohl will succeed in getting the bill
approved.

The legislative push “started as a two-steps-back, one-step-forward process,” he said. With congressional support now
increasing, he said, “We’re probably more in a two-steps-forward, one-step-back process.”